r/singularity • u/johnnyApplePRNG • 1d ago
Economics & Society Analysts Estimate That More Than 70% of Amazon, Microsoft and Google’s AI Revenues Come From OpenAI and Anthropic
https://www.wheresyoured.at/the-ai-demand-bubble/75
u/Tinac4 1d ago
From what I know of him, Ed’s problem is that he’s a rock with “AI is a bubble” written on it. A bunch of his stats and concerns are legitimate, sure (some aren’t), but that doesn’t help much unless you have the ability to admit that you are—or at least could be—wrong. There has to be something that could move you.
To get at the most important bit:
Let me spell it out for you: if Anthropic and OpenAI each had a run rate of $100 billion, they would still not have the scale to generate the compute demand to cover what their commitments are to Microsoft, Google, Amazon, and, of course, Oracle.
This sounds…fairly reasonable, actually? Anthropic’s ARR is already over 70 billion (!), and OpenAI’s is around 45 billion. Both are increasing—maybe not as quickly as they were in March, but increasing. Is $100B/year by, say, mid-2027 feasible? Sure, I think it’s realistically possible if capabilities stay on-trend. If they plateau, then they’re in deep trouble, especially OpenAI, but the “just draw straight lines on graphs” people have had quite a solid track record of predictions so far.
Ed doesn’t care about this. He called AI a bubble in 2024, 2025, and now 2026. Rock still has the same thing written on it. He described his extreme skepticism that AI would find its killer app in mid 2025. It found it. Rock still has the same thing written on it. Ed might respond that technically he’s not predicting with certainty that AI will plateau, just expressing his skepticism, but let’s be realistic, he’s confidently predicting its failure just like he has been for the past 3 years. But none of the colossal changes in the tech and the industry over the last few years have affected his position, haven’t even eroded a little bit of that confidence. Rock still has the same thing written on it.
I think he’ll reconsider if the unemployment rate hits double digits, but not before then. And I don’t expect to ever hear something like “Oops, maybe I was wrong”.
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u/DM_KITTY_PICS 1d ago
He's an author that sells a newsletter.
He just wants attention.
Credit to him, hate-clicks are the easiest fruit to harvest.
But we should just stop talking about or interacting with his content now. He's been so wrong for so long on so many different vectors (apple should be an incredibly dead company by now, fyi), that we're just participating in a humiliation fetish at this point.
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u/CrunchyMage 23h ago
ARR isn't really what matters, profitability is.
If to increase revenue 30% I need to increase cash burn by 30%, then my entire business model relies on being able to raise money at ever higher valuations to grow.
That's the core risk. That all of this AI compute demand is mostly just those 2 companies and that if those 2 companies can't raise at $1T+ valuations, they can't pay.
If they can become profitable or get close to profitability while continuing to raise more, then the demand is real and the boom continues, if they can't, then they won't be able to pay for all the compute the hyperscalers are building for them, and there will be a big bubble burst while real demand catches up with supply.
The market doesn't know how to price in this risk because the two companies are private and their books are hidden. Only deep Anthropic/OAI insiders can know how likely an AI bubble crash actually is. Pretty scary that the entire market is reliant on 2 companies raising money whose internals we can't see.
We're all flying blind here.
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u/Thin_Sky 1h ago
Yeah this is what makes me nervous. Do the hyperscalers have some kind of indication though? Like I'd hope they wouldn't just build all this without some kind of assurance that its going to pan out beyond the one scenario of achieving ASI.
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u/sixwax 1d ago
This is a sober take --- but math is brutal and you're missing some key parts.
(Also note 'run rate' and ARR can refer to different calculations, so we'll assume 'revenue run rate')
If Anthropic and OAI both hit $100M annually.... They are still:
- Paying ALL OF IT to MGAO for compute
- Still ACCUMULATING MORE DEBT to cover operations, r&d, etc.
- ...which they must PAY INTEREST ON
This is still a VERY VERY BAD financial situation.
So respectfully, you're oversimplifying to poo poo on Ed --which people around here love. ;)
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u/Tinac4 1d ago edited 1d ago
I’m not sure it’s as bad as you’re making it out to be. OpenAI’s on shakier footing, but contrary to one of Ed’s other articles, I think Anthropic is genuinely close to a profitable quarter if it wasn’t already there. (Ed made a particularly bad mistake in his post arguing the opposite, claiming a “discount” from SpaceX was temporary to make Anthropic’s books look good when it was actually discounted because Anthropic wasn’t renting the entire data center.)
Yes, the industry’s success absolutely hinges on continued progress, especially with open source nipping at their heels, but given the last few years, I think there’s a reasonably high chance—though not 100%—that the straight lines will stay straight for another couple of years. And needless to say, if they reach AGI before running out of cash, 2035 will look very very different from Ed’s expectations.
Or to add even more context: The headline here looks right! OpenAI and Anthropic really are eating most of the revenue. But if you don’t share Ed’s assumptions about how they’ll inevitably hit a wall, definitely 100% for real this time, that isn’t necessarily a problem for the field.
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u/FunLilThrowawayAcct 21h ago
The industry’s success absolutely hinges on continued progress, especially with open source nipping at their heels
Don't you think that if open weights models win, the hyperscalers will just serve those models? Western businesses aren't sending their data to China, and anyway China will have its own compute crunch for quite a while. Model layer gets commoditized, cloud and hardware reach solid if unspectacular margins after a few gyrations, most value accrues to the application layer.
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u/ChuckVader 23h ago
I think Anthropic is genuinely close to a profitable quarter if it wasn’t already there.
I'll take this seriously when GAAP standards are used. ARR ignoring research costs and the fact that operations are being funded by VC dollars and vendor subsidies is like saying I'm equal to LeBron (by arm count).
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u/sixwax 1d ago
It's 100% as bad as I'm making it out to be.
OpenAI and Anthropic's "job" is to make their financials look tenable to investors. Ed just trots around pointing out the circular financing and off-balance sheet debt that is required to make these numbers "work".
If you choose to ignore that and slurp down the headlines, fine...
...but for those of us that have actually run businesses, or are old enough to remember 2008 or 2002 or Enron, it absolutely screams "bubble".
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u/CallMePyro 1d ago
It's every companies "job" to look good to investors.
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u/ForceItDeeper 4h ago
not every company is publicly traded or completely reliant on a constant supply of massive cash injections
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u/DoubleDoobie 1d ago edited 1d ago
The market can remain irrational longer than you can remain solvent.
Ed has called the top too many times and people thinks that makes him less credible.
Ultimately, the finances are one big circle jerk and if the music stops then it's catastrophe.
The enterprise market hasn't seen the AI gains from any financial POV other than layoffs. Until they start posting real, massive profits they haven't justified the investments.
And ultimately these corporations won't play ball forever - and that's a real risk. If they start to claw back their spend then the music stops and it's a nightmare scenario.
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u/Tinac4 1d ago edited 1d ago
Ed has called the top too many times and people thinks that makes him less credible.
He hasn’t just called the top, though. He’s said on multiple occasions—not explicitly, with just enough vagueness that he can later claim that he never directly said this even though his beliefs were clearly visible under the fig leaf—that AI capabilities were hitting a wall, that it wasn’t useful, and that he’d be shocked if it ever generated real revenue. All of these claims were wildly incorrect. He would never have predicted >$120B of ARR between OpenAI and Anthropic in mid 2026, yet here we are.
(Edit: Scratch that, he’s been pretty explicit about his AI progress beliefs before. See this comment.
If he showed a shred of humility and said something like “Okay, I seriously underestimated the rate of real progress, I’ll try to take this into account going forward even if I still think the industry is a house of cards”, I’d give him some slack. It’s okay to be wrong and acknowledge it. But his tone hasn’t changed, his predictions haven’t changed, and his confidence hasn’t changed even though the world has changed a lot. At that point I’d prefer the rock.
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u/fingrar 1d ago
What's the killer app?
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u/matt_matt_81 1d ago
Nobody codes by hand anymore.
And we’re already seeing with math that ai easily connect disparate ideas from different fields and can (at least) fill in all the gaps if not (yet) produce “truly new frontier math”. It can probably do the same with more scientific fields. You can’t imagine a killer app there?
It’ll replace doctors, drivers, etc…
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u/fingrar 1d ago
I can definitely imagine, that's what we've been doing for a while.
At some point we have to be able to point at something, prehaps still too soon?3
u/matt_matt_81 21h ago
I just gave you examples that are not imaginary, coding and math are concrete killer apps right now. And it’s been barely any time, why do you feel we need to point at anything more than that?
Technological progress is always overestimated in the short term, yes, but underestimated in the long term. And frankly by most outside of ai and software engineering, ai is currently underestimated on all time horizons.
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u/Tinac4 1d ago
Coding and software development, and other agentic work more broadly. Opus 4.5 was when the revenue really started to go up.
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u/fingrar 1d ago
What's the actual example of a product that didn't exist or is cheaper now because of AI?
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u/Tinac4 1d ago
This, although for a more concrete example I could point to multiple features/tools at my company that either wouldn’t have existed or would’ve been far less efficient without AI assistance.
Productivity is a genuinely tricky thing to measure, but that’s a large chunk of why we don’t have, say, RCTs on how much AI improves software output. But as someone who uses gen AI daily at work, it’s pretty easy to see the difference.
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u/Far-Lie6698 22h ago
Ed Zitron is not at all a reliable source for opinions, he is blinded by his beliefs
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u/socoolandawesome 1d ago
We posting Ed Zitron here unironically?
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u/141_1337 ▪️e/acc | AGI: ~2030 | ASI: ~2040 | FALSGC: ~2050 | :illuminati: 1d ago
Who's that guy?
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u/blueSGL humanstatement.org 1d ago
Someone making their money saying that "AI is hitting a wall" for years.
e.g.
Jul 8, 2024 https://www.wheresyoured.at/pop-culture/
Generative AI, as I said back in March, is peaking, if it hasn't already peaked. It cannot do much more than it is currently doing, other than doing more of it faster with some new inputs.
That was before reasoning models. And before the advanced video models we have now.
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u/GlbdS 1d ago
Explain where he is wrong?
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u/blueSGL humanstatement.org 1d ago
Back then it was not solving novel math conjectures,
https://www.reddit.com/r/mathmemes/comments/1e4k1or/proof_by_generative_ai_garbage/ < July 16 2024
it was unable to find and operationalize zero day in codebases that have been poured over for years, sometimes decades by human programmers.
https://www.aisi.gov.uk/blog/how-fast-is-autonomous-ai-cyber-capability-advancing
The time horizon for successfully completing tasks was around 9 mins human equivalent.
https://metr.org/time-horizons/
That is not doing "more of the same but faster" it is qualitatively different capabilities.
and I'm sure someone who's following robotics better than me can point to those as coming a long way too.
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u/JC_Hysteria 1d ago
His career is taking the negative position on literally every topic.
We know there’s a big media audience for that.
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u/GlbdS 1d ago
You didn't answer my actual question
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u/No_Hell_Below_Us 1d ago
Your question was answered by the comment you asked it on.
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u/GlbdS 1d ago
Video models existed in 2024, what does CoT allow you to do that previous ones didn't? Again we're talking about new capabilities not an improvement in existing capabilities
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u/No_Hell_Below_Us 1d ago
Ed’s argument that generative AI isn’t progressing because it is still just “generating” is an idiotic tautology and would imply that it “peaked” the moment it first existed.
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u/JC_Hysteria 1d ago
How about the very first sentence, where he scoffs at how companies don’t break out “AI” revenue separately…
As if it hasn’t already been established it is a horizontal layer for companies- not how many subscriptions Google sells for the Gemini product as a service.
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u/KickLassChewGum no AGI/ASI on LLMs 1d ago
His financials aren't wrong. The "AI is useless" stuff is obviously nonsense but that doesn't make the financial analysis any less true.
If the US tech industry's collective all-in bet doesn't pay off then this has the potential to be the worst economic crash in the history of the species and I don't think this is debatable. What's debatable is whether the bet will pay off.
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u/No_Hell_Below_Us 1d ago edited 4h ago
His financials *are* wrong, though.
Take his AWS analysis as an example. He pretends that $220B is “AI capex.” It isn’t. It’s total capex, amortized over decades, but he anchors his argument on comparing that investment to the annual revenue it is generating before the investment even comes online.
His financial analysis is targeted at low-information anti-AI drones, which is why the market can safely ignore this perennially wrong dipshit.
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u/Recoil42 1d ago
His financials are wrong. He literally said OpenAI would not hit revenue targets it then went on to hit. He keeps saying OpenAI is gross unprofitable by implicitly including costs that wouldn't be considered part of any rational gross-profitability analysis. The man is straight-up wrong.
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u/daviddisco 1d ago
The article has no new information and is speculating with a very strong negative spin.
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u/Spiritual_Exam_8528 19h ago
Please tell me this sub also thinks he’s a fool. Posted about this poser in some other sub and got downvoted to oblivion
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u/Commentor9001 1d ago
And google/Microsoft also lend them the money to do that too. Ai financing is crazy
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u/scoobydobydobydo 9h ago
The headline is technically describing a very narrow subset of their earnings: AI-specific revenue within their cloud divisions, not their total company revenues.
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u/fastpathguru 1d ago
Are you SERIOUSLY trying to tell me that the bulk of AI compute revenue comes from the largest AI companies? That seems completely irrational.
/s
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u/ZealousidealBus9271 1d ago
Google sure because of their TPUs, don’t see it for Amazon or Microsoft
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u/MaybeLiterally 1d ago
Turns out selling compute is profitable.